Pier 1 on Wednesday reported that fourth quarter net sales fell 19.5% to $412.5 million from $512.2 million in the year-ago quarter. Comp store sales in the quarter decreased 13.7%, which the company attributes partially to the shift in holiday selling days not included in the fourth quarter. For fiscal year 2019, the company reported net sales fell 13.7% to $1.6 billion from $1.8 billion year over year. The company’s long-term debt stands at $245.6 million up from $197.9 million in the year-ago period.
The company also reported a net loss of $68.8 million, which includes a $19 million transformation cost related to professional fees and severance costs, from a net income of $15.1 million in the year-ago period, according to a company press release. Gross profit for the quarter totaled $106.8 million, or 25.9% of net sales, from $189.7 million, or 37% of net sales, in the year-ago quarter.
- Pier 1 also appointed Deborah Rieger-Paganis as interim CFO effective immediately, replacing Nancy Walsh, who also served as EVP and principal financial officer, according to a separate press release. Rieger-Paganis is the managing director at AlixPartners, a consulting firm, and has 30 years of experience leading retail companies' finance organizations and business operations.
Pier 1 has had a rough year to say the least. The company's store comps have decreased every quarter this fiscal year, with the past three quarters notching double-digit declines.
The company in January faced NYSE delisting as a result of no longer being in compliance with listing criteria, which requires an average closing share price of at least $1.00 over a 30 trading-day period.
And the sheer volume of executive turnover over the past couple months — further evidenced today with the appointment of Rieger-Paganis as interim CFO and Darla Ramirez as principal financial officer — likely didn't ease Pier 1's woes. In December, then-CEO Alasdair James resigned from his post with board member Cheryl Bachelder succeeding him as interim CEO. The company also snatched Lance Willis from Toys R Us to serve as CIO and EVP.
However, despite the undeniably poor financial results, Bachelder remains confident in a turnaround. And she comes armed with a plan.
The company aims to drive improvement in its revenue and margin, marketing and promotional effectiveness, sourcing and supply chain, cost cutting, and store optimization, according to the release. The company also noted that in the most recent fiscal year, it closed 30 stores and is looking to close up to 45 more in fiscal 2020. Through this plan, the company hopes to drive benefits of $100 million to $110 million, with one-third of that coming from gross margin and two-thirds from cost reduction. The company hopes to recapture $30 million to $40 million of net income and $45 million to $55 million of EBITDA in fiscal year 2020.
"We are continuing to focus on opportunities and initiatives to help drive incremental benefits in the coming years, creating the runway to return our brand to long-term health and sustainable financial performance," Bachelder said in a statement.
However, analysts remain skeptical in the company's capacity for a turnaround. "Pier 1 ended its fiscal year 2019 with continued significant losses," Raya Sokolyanska, VP senior analyst at Moody's, said in comments emailed to Retail Dive. "While the company has embarked on a number of transformation and cost control initiatives, in our view its ability to turn around earnings to a level that supports a timely and economical refinancing of its term loan due 2021 remains highly uncertain."